LIC: Govt plans to file draft papers with SEBI by March for country’s largest IPO ever

Following the sale of Air India to conglomerate Tatas, the government is now to list Life Insurance Corporation (LIC), the country’s largest insurer, early next year. While Tuhin Kanta Pandey, spearheading the drive to sell or shut the state enterprises informed that by November or December, the government hopes to complete the valuation exercise of LIC before filing the draft red herring prospectus by March for the IPO planned.

According to a finance ministry official, LIC to file draft papers with SEBI (Securities and Exchange Board of India) by November. An official stated, “We plan to launch the IPO this fiscal year and have established rigorous deadlines. By November, the DRHP would be filed". 

Pandey stated that though the deal with Tatas to sell Air India for $2.4 billion was long and complex, it provided confidence for the divestment of other state assets. In 2017, an attempt to sell the carrier that a year lost a billion dollars, had failed and 

Stating that government managers were building expertise and experience to handle state sales, he said, "It has now come to fruition, it will give a fillip to privatization going forward". 

Highlighting the fact that selling is not easy, Pandey said that there were several attempts in the earlier times at privatization that made fitful progress, aught up in bureaucratic tangles and resistance from politicians and unions.

Modi govt trying to reinvigorate economy 

In an attempt to strengthen the Indian economy, Prime Minister Narendra Modi's government through market-oriented changes hopes to lure investment away from China and other countries. And the government has completely embraced privatization to meet the demands of building infrastructure and set up social funding, as it did not have the fiscal space to sink billions of rupees into loss-making state enterprises. 

Emphasizing companies must adopt new technologies and so constantly require funds, Pandey said, "We feel the private sector has come of age, also the broader philosophy is it is not the business of government to be in business".

In LIC, the government is expected to sell a 5-10% stake and raise around Rs 90,000 crore making it India's biggest listing. For so long, the company has been considered a strategic asset as it commands more than 60 per cent of India's life insurance market with 36 trillion rupees of assets under management.

(Image: PTI)